The Centre has persuaded Punjab and Jammu and Kashmir to resume work on the stalled Shahpur Kandi dam project, which comes under the Indus Water Treaty, thus helping India utilise its rights on eastern rivers of the basin.

The work on the hydroelectricity project, which was stalled after a dispute between Punjab and Jammu and Kashmir over its design, will “resume soon”, an official statement said.

Punjab’s Secretary (Irrigation) KS Pannu and his Jammu and Kashmir counterpart Saurabh Bhagat had signed the pact in this regard in the presence of Union Water Resources, Secretary Amarjit Singh here last evening, it said.

The two states reached the understanding even as the Permanent Indus Commission is expected to meet later this month to discuss various issues related to the Indus Water Treaty (IWT).

India had last year decided to suspend talks with Pakistan over the treaty in the wake of Uri terror attack.

The NDA government at the Centre had also decided to exercise India’s rights under the treaty by increasing use of the basin river waters. India has under-utilised its share of the river water until now.

“It was unanimously agreed that the work on the Shahpur Kandi dam would resume soon after both the governments (of Punjab and Jammu and Kashmir) formally approve the agreed decisions,” the statement said.

A Water Resources Ministry official said the respective state governments will have to ratify the agreement for the project work to resume.

“We hope it happens soon,” he said.

The construction of Shahpur Kandi project, located in Punjab’s Gurdaspur, was taken up in May 1999. It, however, was discontinued in 2014 following dispute between the two states.

The project, tagged as a “national project” by the Centre, is being built with an estimated cost of Rs 2,285.81 crore (as per April, 2008 price level). It is expected to generate 206 mega watt electricity, the statement said.

The project will continue to be implemented by Punjab and its design shall be as agreed by both the states recently.

“…Model studies will be carried out concurrently to ensure Jammu and Kashmir gets its mandated share of 1,150 cusecs of water,” it said.

It has also been decided to form a team comprising Central Water Commission member and chief engineers of the two states to check whether the construction is in line with the agreement.

Among other decisions, it was decided that Punjab will bear the balance costs on account of compensation for land acquisition in respect of Thein dam, located nearly 10 km upstream of the Shahpur Kandi dam.

“Punjab would also share with Jammu and Kashmir 20 per cent of the total power generated at Thein dam at the mutually agreed rate of Rs 3.50 per unit immediately. This is subject to confirmation of the rates by the Central Electricity Regulatory Commission (though),” it said.

Both the states also agreed that other issues will be referred to arbitration mechanism provided in the agreement signed between the states in 1979, without affecting the progress of work.